Thunder Bay patient wins CRA medical tax credit dispute

Tax Court rules that travel to Thailand, Indonesia was a legitimate tax deduction

This is the second time Thunder Bay resident Trudy Tallon has won a similar case against the Canada Revenue Agency. In 2011, a tax court permitted Tallon to deduct $22,509.77 in medical travel expenses for time spent in hot climates during the 2008 tax year.
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A Thunder Bay woman who suffers chronic pain has won a court victory over the Canada Revenue Agency.

The CRA had denied her claim for a Medical Expenses Tax Credit for a winter trip to some hot-weather countries.

But in a decision last month, the Tax Court ruled that Trudy Tallon's travel was a legitimate tax deduction.

Her doctor had advised her a warm climate would ease her pain.

Revenue Canada denied Tallon's claim for about $17,000 in expenses for a four-month stay in Thailand and Indonesia in 2009 because it said she hadn't travelled to seek medical services.

But Matthew Williams, a tax lawyer and Toronto-based partner with the firm Thorsteinssons, said that the law uses a broad definition of "medical service.”

“What are these deductions and credits really supposed to do? They're intended to relieve the financial burden of people that need to do things that are medically required to make their lives easier,” he said.

Williams was not involved in the court proceedings but offered CBC News background information about the legal context of these kinds of cases.

Tallon's agent in the case, David Bullough, declined to comment.

Williams said people can claim travel costs as medical expenses, but they need a doctor's endorsement.

And there are conditions.

"What you're looking for must not be available locally,” he said.

“Warm weather in Thunder Bay in the winter time, I think, satisfies that criteria. The route taken there must be direct. And it must be reasonable to travel to that place."

The CRA did not challenge the reasonableness of Tallon's destinations.

Second time in court

This is the second time Tallon has won a similar case against the Canada Revenue Agency.

In 2011, a tax court permitted her to deduct approximately $22,000 in medical travel expenses for time spent in hot climates during the 2008 tax year.

The CRA did not appeal that ruling.

"I have difficulty with the position of the Crown in this appeal," wrote Justice Judith Woods in her decision last month.

"The Court is being asked to disagree with a decision of another judge involving the same taxpayer, on the same issue, in an immediately succeeding year."

Woods wrote that she would have considered the request if the CRA had provided her with the reasons for the previous judgment so she could consider them.

However, she wrote that the CRA did not provide a transcript of the reasons and did not offer an explanation for failing to do so.

CRA disputed documentation

The CRA had also argued Tallon's doctor's letter was not valid because it had not been issued for the 2009 tax year.

However Woods wrote she was satisfied with the letter Tallon obtained in 2013 because it appeared she had obtained it as soon as she became aware it was required.

In addition, the CRA argued the letter did not clearly state that Tallon was incapable of travelling on her own and noted that she had travelled alone to Texas for a medical appointment.

However, Woods wrote the doctor's letter said it would would be "extremely difficult … if not impossible" for Tallon to travel without a companion.

"I am satisfied from the evidence that Ms. Tallon would be unable to travel for a lengthy period on her own," wrote Woods.

"A short trip to Texas for a medical appointment is an entirely different matter than a winter-long journey. I find that the requirements for attendant expenses are accordingly satisfied."

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